Uncovering Denials: OIG Reports Reveal Alarming Trends in Medicaid Managed Care Plans

Published in VGM Government Relations on August 25, 2023

In 2022, the OIG released a report outlining their findings which concluded that Medicare Advantage plans were routinely denying authorizations requests and claims for items that would be covered by traditional Medicare Fee For Service (FFS). On July 17, 2023, the OIG released a similar report which shows something similar may be happening within Medicaid Manage Care plans. The three main things that they concluded from their research was that within Medicaid managed care programs:

A high number and rate of denied prior authorization (PA) requests by some MCOs, some of which very likely should have been approved,
limited oversight of prior authorization denials in most States, and
limited access to external medical reviews and a cumbersome appeal and/or state fair hearing process, which may deter providers and or Medicaid patients from pursuing that option.

While conducting their analysis, the OIG looked at authorization and claims data from seven parent companies, namely Molina, CareSource, UHC, Centene, Anthem/Elevance, Aetna, and AmeriHealth Caritas. These parent companies represent 115 Medicaid MCOs in 37 states and cover nearly 30 million people[AR1] , roughly 36% of the total number of Medicaid lives. Some additional findings and statistics from the OIG’s Medicaid report included:

MCOs denied one out of eight (12.5%) requests for prior authorization (PA) in 2019.
MCOs fully or partially denied approximately 2.2 million PA requests in 2019.
12 MCOs had PA denial rates greater than 25%—twice the overall rate.
Most State Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of PA requests.
Many states did not collect and monitor data on these decisions.
Absence of oversight of MCO decisions on PA requests presents a limitation that can allow inappropriate denials to go undetected in Medicaid managed care.
Most State Medicaid agencies reported they do not have a mechanism for patients or providers to submit a PA denial to an external medical reviewer independent of the MCO.
Although all State Medicaid agencies are required to offer State fair hearings as an appeal option, these administrative hearings may be difficult to navigate and burdensome on Medicaid patients. The OIG reported that Medicaid enrollees appealed only a small portion of PA denials to either their MCOs or to State fair hearings.
Seven of Molina’s 12 MCOs had PA denial rates greater than 25%.

As many of you are aware, VGM has participated in several meetings and discussions with CMS over the past 12 months around the topics of improper denials of PA and claims within managed Medicare and managed Medicaid, general lack of oversight for these plans, and overall network adequacy. We will continue to use findings like the ones outlined above along with other examples provided by our members to continue our discussions with CMS representatives, with the goal being to reduce or eliminate these issues within managed care in the future. Please continue to provide us with those examples of improper denials and access-to-care issues resulting from inadequate provider networks.